Economist John Kenneth Galbraith once said there are two kinds of forecasters: those who don’t know and those who don’t know they don’t know. Yet every year, strategists and commentators go through a New Year’s ritual of making bold, often mistaken predictions about the economy, markets, and geopolitics. Given their poor track record, a cynic […]
News & Insights
What Investors Should Do Now
Investors are not very good at handling market downturns. Research has shown that we feel the pain associated with investment losses more acutely than the pleasure of gains. Our ability to stick to a carefully considered investment plan deteriorates as losses mount and perhaps most dangerously, our reactions lag economic reality (see graph below). Consider […]
Coffee and Chocolate – What’s Not to Like?
In the investing world, popular opinion is not always your friend. Investors’ tend to “follow the herd” and this often leads to overpriced securities and ultimately, poor investment returns. But with recipes, things are a little different. The best are handed down from generation to generation. In the kitchen, follow the herd. Our recipe this […]
A Botanist’s Delight
In the old days, and I mean really old days, 150 million years ago, India was attached to Africa. It split off and moved east to where it is today and on its way it left Madagascar all by itself in the Indian Ocean. The island is not that well known but if you are […]
But An Economic Disaster
One step that can be taken is to improve the roads. Outside of the two major north/south and east/west roads, you need a 4-wheel drive to get around the country. Better roads would improve the ability of farmers to get produce to markets and ports, and in an agricultural economy this is crucial. A second […]
In Defense of Buying Bargains
Bargains can be a wonderful thing. People love getting a $100 pair of jeans for $50 — or a bottle of wine or anything else likewise discounted. The exception to this has always been stocks. When a coveted $40 stock goes to $20, it suddenly gets shunned, and that’s been especially true lately. Cheap stocks […]
When Will The Fed Raise Rates?
We don’t have any inside information on the workings of the Fed but our bet is that Janet Yellen and company will start raising short term rates in December. Or at least we think they should. At the last Fed meeting the decision was made to leave rates as is, and the stock market declined. […]
Knowing Which Way The Wind Blows
It is pretty difficult to know what’s what in the world of Global Warming, or should we call it Global Weirdness? The weather we get these days seems to come in only one size: extreme. The world’s biggest weather phenomenon, El Nino, is expected to occur again this year. El Nino comes around every two […]
Cognitive Impairment is a Risk for Everyone
Aging is never too fun to think about, but we all eventually see the physical signs: Slower marathon times, changing body shapes, and graying hair are, after all, hard not to notice. What we don’t recognize as well is cognitive decline, and as a result, we don’t do as good a job preparing for it. […]
Social Security’s Past, Present and Future
When designed back in 1935, Social Security was largely a pay-as-you go system focused on providing financial security to the elderly. Over the years, programs were added to include benefits for the disabled, widows and children. Today, over 59 million people receive almost $870 billion in benefits from one of several Social Security Administration programs. […]
CHART OF THE DAY: What happened in 2001 to make earnings reports matter more?
This chart comes from Maureen McNichols, Bill Beaver, and Zach Wang of the Stanford Graduate School of Business on how corporate earnings reports have been affecting stock price volatility after their release. The surprise: the effect of corporate earnings releases on stock prices has increased over time – not decreased — and the change has […]
QUOTE OF THE DAY on negative Italian bond yields
Yesterday, the FT reported that Italy sold 2-year bonds at a negative yield — joining Germany, France, and Switzerland as countries where the rate to borrow money is negative. A negative yield means investors are paying the Italian government for the right to lend it money, and remember, Italy has one of the highest debt […]
